Determination of Disputed Claims and Partial Settlements Lies with NCLT When Further Examination of Evidence is Required
- REEDLAW
- Nov 15, 2024
- 2 min read
The NCLAT directed the NCLT to conduct a detailed examination of evidence regarding disputed claim settlements and proceed with further adjudication.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench led by Justice Sharad Kumar Sharma (Judicial Member and Mr. Jatindranath Swain (Technical Member) reviewed an appeal and observed that in cases involving disputed claims and partial settlements, the Adjudicating Authority (NCLT) holds the appropriate jurisdiction to determine the balance amount payable. This is particularly applicable when additional facts or evidence, such as parallel proceedings, need a thorough examination to resolve the operational creditor’s grievances.
In this case, the appellant, an operational creditor of Sujyot Infrastructure Private Limited, appealed against an order issued by the NCLT, which dismissed his petition under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. In the original NCLT decision, dated March 31, 2021, the Adjudicating Authority found that part of the appellant’s claim had already been paid, leaving an interest amount of approximately Rs. 33 Lakhs. The NCLT concluded that the remaining unpaid claim did not establish a case of insolvency against the corporate debtor and directed the respondent to settle the balance within three months, permitting the appellant to reapproach the tribunal if unresolved.
Upon appeal, the respondent filed an application, seeking to include an order from the Micro and Small Enterprises Facilitation Council (MSEFC) dated September 13, 2021. This order had dismissed a proceeding initiated by the appellant under Section 18(1) of the MSME Act, which the appellant did not disclose during the Section 9 proceedings before the NCLT. The respondent argued that the appellant’s demand notice under Section 8 of the IBC had been issued before invoking the MSEFC proceedings, which subsequently led to a partial settlement of the claimed amount. The respondent contended that the appellant’s failure to disclose the parallel proceeding to the NCLT constituted a lack of clean hands, especially since the respondent had partially paid the amount as directed by the NCLT.
The appellant disputed the quantum of the payment, asserting that the settlement did not fully satisfy the demand outlined in his Section 8 notice under the IBC. Acknowledging the dispute regarding the unpaid balance and the evidence presented, the NCLAT ruled that the appellant was at liberty to approach the NCLT for further clarification on the balance amount and compliance with the initial order. Since the case involved evidence evaluation and a review of the MSEFC order, the NCLAT determined that the NCLT was the appropriate forum to decide the remaining issues.
The NCLAT, therefore, disposed of the appeal, allowing the appellant to return to the NCLT to address his grievances as per the NCLT’s March 31, 2021, order. The appeal was dismissed, with the NCLAT reaffirming that the appellant could pursue his claim through the NCLT as directed.
Mr. K. Sureshkumar, Advocate represented the Appellant.
Ms. Janani Shankar, Advocate appeared for the Respondent.
Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines Press Release and more.
Click on the Citation/Link to access these resources
Comments